Interested to buy platinum for your retirement investment? Then read on for answers to some of the most frequently asked questions about platinum investing.
In this article:
- What Is Platinum?
- How Important Is Platinum?
- Can You Buy Platinum?
- Which Companies Produce Platinum?
- How Can You Invest in Platinum?
- Is It Good to Invest in Platinum?
- What Is the Price of Platinum Stocks?
- When Should You Buy and Sell Platinum?
- Where Can I Store My Platinum Assets?
What You Need to Know If You Want to Buy Platinum as a Retirement Investment
What Is Platinum?
Platinum is a precious metal, and is, in fact, one of the most valued precious metals in the world.
Like other precious metals, platinum has a limited supply. Most of it is mined in South Africa and Russia, with these locations and their respective political situations having an influence on the price of platinum.
How Important Is Platinum?
Platinum is used for industrial purposes, which is what makes it an ideal investment.
Because of its varied industrial uses, the platinum market is steadily growing. In 2018, Anglo American Platinum mined a total of 1.29 million ounces of platinum.
Platinum is used in the following industries:
- Automobile and transportation
- Fashion and jewelry
- Production of other chemicals as well, such as refining petroleum
- The manufacturing industry, specifically appliances and computer systems.
Platinum is also valued by the investing community for these reasons:
- Platinum is approximately 15 to 20% scarcer than gold
- Supply and demand are relatively specialized and stable
- This precious metal can also be a collectible and store of value.
Can You Buy Platinum?
Anybody can buy Platinum. However, the main customers can be categorized into either industrial players or investors.
For investing purposes, you should make sure you buy platinum from a reliable and legal source.
Which Companies Produce Platinum?
Some of the platinum producers you can consider investing in include:
- Anglo American Platinum Ltd (ADR) or Vale SA (NYSE:VALE)
- Sibanye-Stillwater (NYSE:SBGL)
- Impala Platinum Holdings Limited (ADR) (OTC:IMPUY)
What is an American depository receipt (ADR)? These refer to a certificate issued by a bank that allows investors to invest in a foreign company through a stock market in the U.S.
What is Over-the-Counter (OTC)? Over-the-counter stocks are those that aren’t available in big stock exchanges like the NYSE. Rather, stocks or shares of this company can be found in over-the-counter markets, which are not centralized like the NASDAQ or other formal stock exchanges.
If you invest in an OTC stock, you’ll need a self-directed IRA. Most custodians of Traditional or Roth IRA will not allow an OTC stock inside your portfolio.
How Can You Invest in Platinum?
Want to know how to invest in platinum? For investment purposes, an interested investor can buy platinum through a myriad of asset choices.
- You can buy stocks of companies involved in the mining industry or in companies that buy platinum.
- Another investment possibility is through contracts in the commodities sector. An investor can buy ounces of platinum and receive a certificate stating their ownership at a specific price.
- For investors with a self-directed IRA, having platinum coins can provide tax advantages as well as a relatively safe storage of platinum.
- Another interesting way to invest in the platinum sector is through a managed fund (e.g. mutual funds). In this type of find, a team performs the administration, storage, and any transactions related to the asset.
- You can also buy platinum coins in the collectibles market. However, do note that you’ll be dealing directly with vendors, and these come with their own set of pros and cons.
Is It Good to Invest in Platinum?
There are a lot of reasons why platinum may be a good investment option. These include:
- It has a steady demand, irrespective of the speculative activity in investing. This is because there’s a steady demand in the automobile and jewelry industry.
- The limited supply of platinum in the world
- High prices for an ounce of platinum in both the industrial and investment markets
- Relatively mature market with diverse buyers from different industries
Since platinum is under the umbrella of precious metals, most investors would consider it safe storage of value to beat inflation.
Factoring legal and political risk, platinum is relatively stable compared to other precious metals.
What Is the Price of Platinum Stocks?
As of January 24, 2020, the price of buying (ask) an ounce of platinum is $1,009 and selling (bid) at $1,004. Note though that the bid and ask price for platinum may be different for directly buying platinum.
When Should You Buy and Sell Platinum?
First, a disclaimer needs to be set. The timings in the market can be profitable but also extremely risky.
Since precious metals and platinum are considered as risk-averse assets, they tend to perform better when economic conditions are bad. Just like debt instruments like bonds, investors flock to these “safe” investments when uncertainty in the market starts to creep in.
The general strategy is to buy and hold — buy platinum when it’s cheap and sell when it is high.
For more personalized advice, it’s ideal to talk to a financial advisor who can create a proper investment strategy based on your investment goals and risk tolerance.
Where Can I Store My Platinum Assets?
Physically, platinum doesn’t erode or tarnish. That makes it a great investment when it comes to storage, unlike other investment assets.
Generally, a Traditional or Roth IRA will accept platinum stocks and mutual funds. In fact, the custodian may also allow derivatives like a call or put option for platinum.
However, if you want to physically store and own platinum through platinum coins, you may want to open a self-directed IRA. This is because some IRA custodians may not allow collectibles under your Traditional or Roth IRA.
Because platinum as an investment asset is not as popular as gold or silver, you have a lot of room to grow. I hope these have answered some questions you may have about investing in platinum for your retirement.
What got you interested in investing in platinum? Have you experienced investing in other precious metals like gold and silver? Share your thoughts with us in the comments section below.